Homestead programs are widely used as a form of property tax relief for owner-occupied residential property. Thirty-eight states and the District of Columbia make homestead exemptions or credits broadly available to homeowners. Although they work in slightly different ways, both types of homestead programs reduce property taxes.

Homestead exemption programs reduce property taxes by exempting a certain amount of a home's value from taxation. The value of the tax reduction depends on the exemption amount and the assessment level, or the portion of a property's value that is subject to the local government's tax rate. Homestead credit programs, on the other hand, provide tax credits directly to taxpayers. Qualifying homeowners receive a discount on their tax bills or a rebate equal to a certain percentage of taxes due or a fixed amount. States sometimes reimburse local governments for some or all of the revenue loss from homestead programs. Otherwise, the local government either absorbs the revenue loss or shifts the tax burden to other property.

Attachment 1 lists the 39 jurisdictions that offer homestead exemptions or credits and briefly describes each program's eligibility criteria, benefit level, and income limits. For the purposes of this report, we focus on programs that are broadly available to homeowners and exclude those that are restricted to certain individuals only (e.g., veterans or surviving spouses of veterans killed in the line of duty).

TYPES OF HOMESTEAD PROGRAMS

As Attachment 1 shows, 23 jurisdictions have homestead exemptions, 8 have homestead credits, and 8 have both. Table 1 lists the jurisdictions that offer each type of benefit.

Table 1: Summary of Homestead Programs by Type

Homestead Exemption

Homestead Credit

Both

Alabama

Nebraska

Arizona

DC

Alaska

New Hampshire

Arkansas

Georgia

California

New Mexico

Iowa

Illinois

Colorado

New York

Maryland

Kansas

Delaware

North Carolina

Minnesota

Massachusetts

Florida

Oklahoma

New Jersey

Mississippi

Hawaii

Pennsylvania

Tennessee

Ohio

Idaho

South Carolina

Wyoming

West Virginia

Indiana

Texas

Kentucky

Utah

Louisiana

Wisconsin

Maine

TARGETED PROGRAMS

Age Restrictions

Homestead programs are, by definition, restricted to a property owner's primary residence. But in many cases, states target their programs to seniors or provide them with more generous benefits. (Some states extend these same targeted benefits to individuals with disabilities as well.) Table 2 lists the states that target their homestead programs to seniors, provide the same benefits to all homeowners, or offer different programs for different classes of homeowners.

Table 2: Summary of Homestead Programs by Age Restrictions

Seniors Only*

All Ages

Program Varies by Recipient*

Alaska

Arizona

Alabama

Colorado

Arkansas

District of Columbia

Delaware

California

Florida

Kentucky

Idaho

Georgia

Nebraska

Iowa

Hawaii

New Hampshire

Louisiana

Illinois

New Jersey

Maine

Indiana

North Carolina

Maryland

Kansas

Tennessee

Minnesota

Massachusetts

West Virginia

New Mexico

Mississippi

Oklahoma

New York

Pennsylvania

Ohio

Utah

South Carolina

Wisconsin

Texas

Wyoming

*Many of these states extend the same homestead benefits to individuals with disabilities as well.

As Table 2 shows, 10 jurisdictions target their homestead programs to seniors, while 15 offer the same benefits to homeowners regardless of age. For example, Colorado provides individuals who are age 65 or older and have lived in their homes for at least 10 consecutive years with a homestead exemption equal to 50% of the property's market value, up to $200,000. Idaho, on the other hand, provides a homestead exemption to all homeowners equal to 50% of the property's assessed value, up to $81,000 for 2013.

The remaining 14 jurisdictions have different programs for different types of homeowners, but offer more generous benefits to seniors or homeowners with disabilities. The District of Columbia, for example, provides a homestead exemption for all homeowners equal to $67,500 of the property's assessed value. It also provides eligible seniors age 65 or older with a credit of 50% of their property taxes due.

Income Limits

Seventeen jurisdictions require that homeowners meet income eligibility requirements in order to qualify for a homestead exemption or a more generous benefit. For example, Indiana offers seniors age 65 or older with income of $25,000 or less a 50% exemption in their home's assessed value, up to $12,480. Georgia offers all seniors age 65 or older with a 100% exemption from state property taxes, regardless of income, but it offers an additional exemption from county and school taxes for seniors with income of $10,000 or less.

Attachment 1: Homestead Exemption and Credit Programs

(AV = assessed value; MV = market value)

Jurisdiction

Type of Benefit

Eligible Homeowners

Benefit

Income Limit

Alabama

Exemption

Age 65 or under

$4,000 of AV (state property taxes)

$2,000 of AV (county and school district taxes); municipalities may exempt an additional $2,000

None

Age 65 or older or retired due to permanent disability or blindness

100% exemption (state property taxes)

$5,000 of AV (county and school district taxes) for those below income limit; $2,000 of AV for those above the limit, with local option for an additional $2,000 exemption

100% exemption from county and city taxes for those below income limit (no income limit for individuals with permanent disabilities)

None

$12,000

$7,500

Alaska

Exemption

Age 65 or older, veterans with disabilities, or eligible surviving spouses

$150,000 of AV

Municipalities may provide an additional exemption

None

Arizona

Credit

All ages

40% of school district taxes, up to $600

None

Arkansas

Credit

All ages

$350 property tax credit

None

California

Exemption

All ages

$7,000 of AV

None

Colorado

Exemption

Individual must be age 65 or older and have lived in the home for at least 10 years

50% of MV, up to $200,000

(program suspended from 2009-2011; restored in 2012)

None

District of Columbia

Exemption

All ages

$67,500 of AV, increased annually, beginning October 1, 2012

None

Credit

Age 65 or older or individuals with disabilities

Credit of 50% of property taxes due

$100,000

Delaware

Exemption

Individual must be age 65 or older and have lived in the state for at least 3 years

$5,000 of AV for state property tax purposes

$3,000 ($6,000 if married)

Age 65 or older

Portion of assessed value, set by local option; no state cap

Lesser of 50% of school taxes remaining after homestead exemption or $500

None

Florida

Exemption

All ages

$25,000 of AV in counties with tax rolls, including school district taxes, plus an additional $25,000 of AV over $50,000 for all levies, except school district taxes

None

Age 65 or older

Additional $50,000 exemption, by local option

$26,603

Georgia

Exemption

All ages

$2,000 of AV (state, county, and school taxes); additional exemption available by local option

None

Age 65 or older

100% exemption (state taxes)

None

Age 65 or older

$4,000 of AV (state and county taxes)

$10,000, excluding pension income

Age 62 or older

$10,000 of AV (school taxes)

$10,000

Credit

All ages

Credit equal to $8,000 times the mill rate for county, state, school, and city taxes

None

Hawaii

Exemption

Age 59 or under

$12,000 of AV

None

Age 60 to 69

$24,000 of AV; counties may increase the exemption

None

Age 70 or older

$30,000 of AV; counties may increase the exemption

None

Idaho

Exemption

All ages

50% of AV, up to $81,000 for 2013

None

Illinois

Exemption

All ages

Exemption equal to the increase in the current year's AV above its 1977 value, up to $6,000

None

Age 65 or older

Up to $4,000 of AV

None

Credit

All ages

5% of property taxes paid

None

65 or older and must occupy the home for more than 6 months

Local option credit for city, village, or incorporated town taxes

None

Indiana

Exemption

All ages

60% of AV or $45,000; Supplemental exemption of 35% of AV that is up to $600,000 and 25% of AV over that threshold

None

Individuals age 65 or older who have owned the house for at least one year

50% of AV, up to $12,480

$25,000

Iowa

Credit

All ages

Credit equal to the levy on $4,850 of MV ($62.50 minimum)

None

Kansas

Exemption

All ages

$20,000 of AV ( state portion of school taxes)

None

Credit

Age 65 or older

75% of taxes paid

120% of the federal poverty level for 2 persons

Kentucky

Exemption

Age 65 or older or individuals with permanent disabilities

Exemption adjusted annually ($36,000 of AV for 2013 and 2014)

None

Louisiana

Exemption

All ages

$7,500 of AV (state, parish and special taxes)

None

Maine

Exemption

All ages

$10,000 of AV

None

Maryland

Credit

All ages

Credit amount based on the tax due on the portion of property's assessment increase that exceeds cap (cap varies by county and municipality, up to 10%)